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Investments (Tables)

3 Months Ended

Mar. 31, 2013

Schedule for fixed income securities at amortized cost, gross unrealized gains and losses and fair value

($ in millions)		Amortized		Gross unrealized				Fair
		cost		Gains		Losses		value
March 31, 2013
U.S. government and agencies	$	1,776	$	221	$	--	$	1,997
Municipal		3,983		615		(29)		4,569
Corporate		29,314		2,661		(115)		31,860
Foreign government		1,007		150		(2)		1,155
Asset-backed securities (“ABS”)		1,748		47		(85)		1,710
Residential mortgage-backed securities (“RMBS”)		1,589		81		(48)		1,622
Commercial mortgage-backed securities (“CMBS”)		1,260		74		(42)		1,292
Redeemable preferred stock		15		3		--		18
Total fixed income securities	$	40,692	$	3,852	$	(321)	$	44,223

December 31, 2012
U.S. government and agencies	$	2,137	$	242	$	--	$	2,379
Municipal		4,153		612		(61)		4,704
Corporate		28,748		2,896		(113)		31,531
Foreign government		1,017		164		(1)		1,180
ABS		1,921		49		(105)		1,865
RMBS		1,778		82		(69)		1,791
CMBS		1,425		60		(77)		1,408
Redeemable preferred stock		15		3		--		18
Total fixed income securities	$	41,194	$	4,108	$	(426)	$	44,876

Schedule for fixed income securities based on contractual maturities

($ in millions)		Amortized cost		Fair value
Due in one year or less	$	2,153	$	2,181
Due after one year through five years		8,812		9,476
Due after five years through ten years		15,751		17,158
Due after ten years		9,379		10,784
		36,095		39,599
ABS, RMBS and CMBS		4,597		4,624
Total	$	40,692	$	44,223

Schedule of net investment income

($ in millions)		2013		2012
Fixed income securities	$	496	$	521
Mortgage loans		91		85
Equity securities		2		1
Limited partnership interests		30		67
Short-term investments		1		--
Policy loans		12		13
Other		16		14
Investment income, before expense		648		701
Investment expense		(27)		(28)
Net investment income	$	621	$	673

Schedule of realized capital gains and losses by asset type

($ in millions)		2013		2012
Fixed income securities	$	(18)	$	(50)
Mortgage loans		31		(1)
Equity securities		1		--
Limited partnership interests		--		(1)
Derivatives		7		22
Other		(2)		8
Realized capital gains and losses	$	19	$	(22)

Schedule of realized capital gains and losses by transaction type

($ in millions)		2013		2012
Impairment write-downs	$	(2)	$	(20)
Change in intent write-downs		(7)		(16)
Net other-than-temporary impairment losses recognized in earnings		(9)		(36)
Sales		21		(9)
Valuation of derivative instruments		(4)		8
Settlements of derivative instruments		11		15
Realized capital gains and losses	$	19	$	(22)

Schedule of other-than-temporary impairment losses by asset type

($ in millions)		2013						2012
		Gross		Included in OCI		Net		Gross		Included in OCI		Net
Fixed income securities:
Municipal	$	(7)	$	--	$	(7)	$	--	$	--	$	--
Corporate		--		--		--		(13)		--		(13)
RMBS		1		(1)		--		(12)		(3)		(15)
CMBS		(19)		(7)		(26)		(6)		--		(6)
Total fixed income securities		(25)		(8)		(33)		(31)		(3)		(34)
Mortgage loans		26		--		26		(3)		--		(3)
Limited partnership interests		--		--		--		(1)		--		(1)
Other		(2)		--		(2)		2		--		2
Other-than-temporary impairment losses	$	(1)	$	(8)	$	(9)	$	(33)	$	(3)	$	(36)

Schedule of other-than-temporary impairment losses on fixed income securities included in accumulated other comprehensive income

($ in millions)		March 31, 2013		December 31, 2012
Municipal	$	(5)	$	(5)
Corporate		(1)		(1)
ABS		(12)		(14)
RMBS		(94)		(103)
CMBS		(12)		(19)
Total	$	(124)	$	(142)

Schedule of rollforwards of the cumulative credit losses recognized in earnings for fixed income securities held

($ in millions)		Three months ended March 31
		2013		2012
Beginning balance	$	(345)	$	(581)
Additional credit loss for securities previously other-than-temporarily impaired		(11)		(16)
Additional credit loss for securities not previously other-than-temporarily impaired		(15)		(2)
Reduction in credit loss for securities disposed or collected		28		104
Reduction in credit loss for securities the Company has made the decision to sell or more likely than not will be required to sell		--		--
Change in credit loss due to accretion of increase in cash flows		--		--
Ending balance	$	(343)	$	(495)

Schedule of unrealized net capital gains and losses

($ in millions)		Fair		Gross unrealized			Unrealized net
March 31, 2013		value		Gains		Losses	gains (losses)
Fixed income securities	$	44,223	$	3,852	$	(321)	$	3,531
Equity securities		379		68		(1)		67
Short-term investments		1,343		--		--		--
Derivative instruments (1)		(14)		3		(17)		(14)
EMA limited partnerships (2)								--
Unrealized net capital gains and losses, pre-tax								3,584
Amounts recognized for:
Insurance reserves (3)								(623)
DAC and DSI (4)								(400)
Amounts recognized								(1,023)
Deferred income taxes								(901)
Unrealized net capital gains and losses, after-tax							$	1,660

______________

(1) Included in the fair value of derivative instruments are $3 million classified as assets and $17 million classified as liabilities.

(2) Unrealized net capital gains and losses for limited partnership interests represent the Company’s share of EMA limited partnerships’ other comprehensive income. Fair value and gross gains and losses are not applicable.

(3) The insurance reserves adjustment represents the amount by which the reserve balance would increase if the net unrealized gains in the applicable product portfolios were realized and reinvested at current lower interest rates, resulting in a premium deficiency. Although the Company evaluates premium deficiencies on the combined performance of life insurance and immediate annuities with life contingencies, the adjustment primarily relates to structured settlement annuities with life contingencies, in addition to annuity buy-outs and certain payout annuities with life contingencies.

(4) The DAC and DSI adjustment balance represents the amount by which the amortization of DAC and DSI would increase or decrease if the unrealized gains or losses in the respective product portfolios were realized.

		Fair		Gross unrealized			Unrealized net
December 31, 2012		value		Gains		Losses	gains (losses)
Fixed income securities	$	44,876	$	4,108	$	(426)	$	3,682
Equity securities		345		36		(1)		35
Short-term investments		875		--		--		--
Derivative instruments (1)		(17)		2		(19)		(17)
EMA limited partnerships								1
Unrealized net capital gains and losses, pre-tax								3,701
Amounts recognized for:
Insurance reserves								(771)
DAC and DSI								(408)
Amounts recognized								(1,179)
Deferred income taxes								(888)
Unrealized net capital gains and losses, after-tax							$	1,634

_______________

(1) Included in the fair value of derivative instruments are $2 million classified as assets and $19 million classified as liabilities.

Schedule of change in unrealized net capital gains and losses

($ in millions)
Fixed income securities	$	(151)
Equity securities		32
Derivative instruments		3
EMA limited partnerships		(1)
Total		(117)
Amounts recognized for:
Insurance reserves		148
DAC and DSI		8
Amounts recognized		156
Deferred income taxes		(13)
Increase in unrealized net capital gains and losses	$	26

Summary of gross unrealized losses and fair value of fixed income and equity securities by length of time

($ in millions)	Less than 12 months					12 months or more						Total
	Number		Fair		Unrealized	Number		Fair		Unrealized		unrealized
	of issues		value		losses	of issues		value		losses		losses
March 31, 2013
Fixed income securities
U.S. government and agencies	2	$	18	$	--	--	$	--	$	--	$	--
Municipal	6		66		(4)	29		167		(25)		(29)
Corporate	149		1,830		(32)	63		792		(83)		(115)
Foreign government	2		120		(2)	--		--		--		(2)
ABS	2		11		--	75		772		(85)		(85)
RMBS	48		16		--	160		378		(48)		(48)
CMBS	6		57		(1)	27		230		(41)		(42)
Total fixed income securities	215		2,118		(39)	354		2,339		(282)		(321)
Equity securities	4		28		(1)	--		--		--		(1)
Total fixed income and equity securities	219	$	2,146	$	(40)	354	$	2,339	$	(282)	$	(322)

Investment grade fixed income securities	156	$	1,815	$	(32)	237	$	1,574	$	(148)	$	(180)
Below investment grade fixed income securities	59		303		(7)	117		765		(134)		(141)
Total fixed income securities	215	$	2,118	$	(39)	354	$	2,339	$	(282)	$	(321)

December 31, 2012
Fixed income securities
U.S. government and agencies	1	$	15	$	--	--	$	--	$	--	$	--
Municipal	11		101		(7)	50		395		(54)		(61)
Corporate	79		1,086		(27)	66		829		(86)		(113)
Foreign government	2		121		(1)	--		--		--		(1)
ABS	5		38		--	76		763		(105)		(105)
RMBS	49		30		--	164		442		(69)		(69)
CMBS	10		65		--	43		358		(77)		(77)
Redeemable preferred stock	--		--		--	1		--		--		--
Total fixed income securities	157		1,456		(35)	400		2,787		(391)		(426)
Equity securities	3		57		(1)	1		--		--		(1)
Total fixed income and equity securities	160	$	1,513	$	(36)	401	$	2,787	$	(391)	$	(427)

Investment grade fixed income securities	132	$	1,244	$	(29)	262	$	1,919	$	(195)	$	(224)
Below investment grade fixed income securities	25		212		(6)	138		868		(196)		(202)
Total fixed income securities	157	$	1,456	$	(35)	400	$	2,787	$	(391)	$	(426)

Summary of carrying value of non-impaired fixed and variable rate mortgage loans by debt service coverage ratio distribution

($ in millions)		March 31, 2013						December 31, 2012
Debt service coverage ratio distribution		Fixed rate mortgage loans		Variable rate mortgage loans		Total		Fixed rate mortgage loans		Variable rate mortgage loans		Total
Below 1.0	$	230	$	--	$	230	$	266	$	--	$	266
1.0 - 1.25		1,186		--		1,186		1,158		--		1,158
1.26 - 1.50		1,378		16		1,394		1,364		17		1,381
Above 1.50		2,842		129		2,971		2,854		129		2,983
Total non-impaired mortgage loans	$	5,636	$	145	$	5,781	$	5,642	$	146	$	5,788

Schedule of net carrying value of impaired mortgage loans

($ in millions)		March 31, 2013		December 31, 2012
Impaired mortgage loans with a valuation allowance	$	24	$	147
Impaired mortgage loans without a valuation allowance		18		8
Total impaired mortgage loans	$	42	$	155
Valuation allowance on impaired mortgage loans	$	15	$	42

Schedule of rollforward of the valuation allowance on impaired mortgage loans

($ in millions)		2013		2012
Beginning balance	$	42	$	63
Net (decrease) increase in valuation allowance		(26)		3
Charge offs		(1)		(6)
Ending balance	$	15	$	60

Schedule of carrying value of past due mortgage loans

($ in millions)		March 31, 2013		December 31, 2012
Less than 90 days past due	$	38	$	20
90 days or greater past due		4		4
Total past due		42		24
Current loans		5,781		5,919
Total mortgage loans	$	5,823	$	5,943